tv CNN Newsroom CNN May 29, 2011 2:00pm-3:00pm PDT
i'm ali velshi. welcome on "your money." if history is a guide, president obama should have a tough time convincing voters to give him another term next year. candy crowley is with me now. candy, eight of ten americans believe the economy is in poor shape. why are republicans not lining up to take this president on in 2012? >> i think there are a lot of individual reason force individual candidates who decided not to run. but i have to tell you you would look at those figures and you think, whoa, the president is in for a rough re-election ride should he get it simply because if that many people think the economy is poor, that certainly is not going to help him at the voting booth, but here's the rub. they don't actually wlblame president obama for the economy. 55% of americans blame george bush. just 30% blame president obama,
so he is running counter to conventional wisdom in that people still blame president bush for the current state of the economy. so i don't think it's -- while it looks like a great number, republicans ought to be jumping in and saying, oh, wow, the president is really vulnerable. when you look inside the numbers, he is less vulnerable than that would imply. >> let's take a look at some of the notable republicans who have said no just for the month of may for running for the gop election. jeb bush, donald trump, mike huckab huckabee. indiana govern. both present clear contrast to president obama's view of how to fix this economy in the united states going forward. candy, do conservatives fear that they simply don't have a message that is going to resonate with voters on a national stage when it comes to the budget or particularly paul ryan's plan to overhaul medicare
which does not seem to be gaining traction. >> i think conservatives are more worried they don't have the messenger. they firmly believe that they have the message. this is kind of like what we were just talking about. mitch daniels decided not to run not because he happens to think that he can't beat president obama. he decided not to run because he's got some real family considerations there, a wife and children that really don't want to be exposed to the limelight. they have had at times a very rocky marriage that ended in divorce and a remarriage, and they just didn't want to be out there. look at paul ryan, he right now is a very powerful republican. he is very run. remember when barack obama was a candidate and everyone said why are you running now, you're so young, and he said it's a timing thing. the ryan people looked at it and said this is not his time and he's got time. >> mark preston is our cnn senior political editor. mark, republican primary voters in new hampshire are giving us a
glimpse at which candidate they would trust to handle the economy. mitt romney had 44% and everyone else. let's talk about mitt romney for a second. committee gain the support of the tea party driving the agenda for the republican party these days and make himself a viable candidate? >> he is cleary going to have trouble with certain segments of the tea party. they think he's a flip-flopper and really don't like what he did with health care in massachusetts. those are great numbers up in new hampshire. he sees new hampshire as a must win if he wants to win the republican nomnomination. we are seeing he is running entirely on the economy. he thinks he can be somebody who can fix it and turn things around. while we heard a lot from mitt romney back in 2008 about social issues and economic issues, he's really squarely focusing right now on economic issues. >> those economic issues that matter the most right now are the budget we have got to deal
with for 2012. diane, the hottest topic in washington is debt and deficits and that's about the budget. specifically the countdown to august 2nd, the day the treasury secretary tim geiger says he can't keep america from defaulting on its loans if we don't raise the debt ceiling. a number of republicans are challenging the notion that not raising the debt ceiling would be catastrophic. take the politics side. >> there is a technical default on the debt around the debt ceiling back in 1979, and that was just a mistake where they used to send out the checks and the checks got there a day or two late. just from that without all the politics around it and the game of chicken going on, we saw 60 basis point spike in treasury bond from that alone. so that gives us some warning that this is not something to play around with. >> let me stop you there, diane. for our viewers who don't trade-in treasury bonds, a 60
basis points increase, affect your credit cards. it affects your loans, the mortgage you're trying to get. >> would you call up your banker and say, oh, by the way, i might or might not pay on my loan in august? and i'm going to threaten you with that now and not think that that would hurt your relationship with you ar banker? that's ridiculous. silly to put this in the middle and play chicken with the debt ceiling as az political leverage point. no country in the world goes out and tells their debtors they might or might not be insolvent on august 2nd. >> who is going to blink? >> i'm not sure we have the answer right now. i think bottom line is i think we are going to see the debt ceiling raised. the fact of the matter is when you hear, yeah, exactly when you hear these dire warnings, in the end we could have all the political gainmanship that we have in washington d.c. but the fact of the matter is something needs to be done.
>> candy, what do you think about this? you have watched every political game being played? frankly some of it's not a game. it's the art of compromise. it does seem sometimes we are hearing from ideological conservatives and the tea party. >> at the moment inside the republican party when it comes to this issue, and now i'm just talking about the lawmakers on capitol hill, that's a minority. it's a minority saying it's not going to make any difference when whether we default or not. i will say the treasury secretary didn't do the cause much good when he said we are actually, went past the debt ceiling a couple weeks ago but i can make it work until august. it sort of feeds the whole thing like it doesn't really matter, but in the end there are plenty of folks on both sides, including the leadership that know that this is a dire need and that they need to do it. congress expands the amount of time it's allotted, so they will push this up to the very end, but it will get done. >> we have learned that. candy, mark, diane, stay where you are. the debt is a major issue for
americans, so are their jobs. which one is more important? did can you deal with both at the same time? i will ask this great panel when we come back. [ female announcer ] experience dual-action power, with listerine® whitening plus restoring rinse. it's the only listerine® that gets teeth two shades whiter and makes tooth enamel two times stronger. get dual-action listerine® whitening rinse. building whiter, stronger teeth.
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republican. a democrat took that seat. and this budget business, this deficit business, and particularly what the republicans are thinking of doing with medicare may have influences. tell us about this for a second. >> sure. what we saw up in the special election in new york state is that democrats did a very good job of trying to convince voters that the fact that the republican proposal here in washington, that paul ryan proposal went really strict medicare as he knows it right now. he put the fear of god into a lot of voters. this is a traditionally republican district gally. republicans should have held on to this seat but were not able to. it has greater consequences on republicans talking about trying to fix things in the long term by really understanding what are the political consequences by doing things unpopular such as attacking entitlements such as social security, medicare. >> diane, this is not entirely unlike some of the discussions
that have gone on in europe. when we talk about entitlement, in europe there were things people expected to get, counted on getting, and the government said we are in too much trouble. you are not going to get those same things. they were rioting in the streets. it's huring their economies. how does that compare? should this be a warning signal to us? >> it certainly is a warning signal. it's a shot over the bow, though the u.s. is in much better shape. yesterday i was in d.c. talking to many of the senators working on the bipartisan long-term structural deficit reduction. it's interesting how they won't talk about the details because they don't want to poe lit size it. britain has done major programs and now paying the consequences on their economy right now. they had to do that because they had no choice. they pushed it to the limit and got a downgrade on their debt, facing higher interest payments. we don't want to go there. we don't want the britts to outdo us when they are in the
worse position than we are and we have some opportunities. i think there is some movement to think we can get something done, but the politics of it, the confusing of short-term, the debt ceiling, long-term structural stuff, there are two different issues. it's now starting to be separated in washington. i think that's good news. >> candy, you are an expert at this. you have covered politics for so long. the one frustrating part that makes me want to pull my hair out is people are not yet talking about specifics about how to curb our long-term spending. everybody has numbers about how much they want to cut. when it come down to specifics as question saw in that election in new york, voters may not go with the republicans on this. >> well, yes. and especially in a lot of ways it depends on sales job and the republicans say well, we have framed this wrong but you're also seeing republicans beginning to back away from this. there is a commonali aalty of purpose, if you will, that you can question the will, but there certainly is a commonality of
purpose between the two parties. they all know that they have to do something about the debt. but to ask politicians to not show an election, it is going to show up. it will show up next year. and the question is, and i think this is key to me on why they don't have this debt ceiling thing and this debt, some kind of debt packaged together, is the american people haven't c m clammered for it. nobody goes home and says hey, left the debt ceiling. no one has explained over and over again which is what you have have to do, what the price of that debt ceiling is going to be. no one has explained what the price of that is? >> mark, you have seen in our polling, people want to lower the debt ceiling. they want to get control on spending. they want to balance the budget, but they do not want their entitlements cut, they don't want services cut. there really is a disconnect here. you can't have both. >> no, you can't have both.
let's compare it to this nuclear power. not in my backyard. so when it comes to entitlements, not if it's my entitlement, right, so that's what people are saying. yes, people are looking further down in future generations saying we don't want to put the burden on our kids and grandkids, but we don't want our medicare cut, we don't want our social security cut. that's why you have all this posturing in washington. as everyone has said on this panel, nobody is going to be given specifics because it's going to hurt them in the short-term. the short-term for them right now is the 2012 elections. >> from a nonpolitical economic perspective what is the solution to economic growth, to debt reduction, and to creating more jobs? >> well, i think the key is not doing too much up front but having a plan over the next ten to fifteen years phases in a lot on both the revenue and expenditure side. economists are agreed. ideologically republicans don't want to raise taxes. democrats want to raise taxes and not cutting the spending.
the reality is it has to be on both sides of the balance sheet. that's how it's done. you can do it phased in over time so you can actually get a better tax code. who needs a tax code like we have? particularly corporations. don't we want them bringing the jobs back here instead of booking the profits abroad. the tax code reforms. i think that's positive. that's what we want for long-term growth is to bring in some of our spending but also deal with the revenue side a more reasonable in reforms to tax code. it does mean some people will pay more taxes as well. that's hard. but if you make it a cleaner tax code, there's a lot of benefits to that as well. >> the three of you are all compromisers. none of you have a future in politics. great to see you all. >> thank heavens. >> thanks so much. we will talk to you again soon. an mba can go a long way toward helping you work toward that dream job and a dream salary. we are going to show you just how far some people are willing to go to get their mba next on "your $$$$$." it always happens.
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everybody is looking for ab an edge, when it comes to education some people are getting that edge by traveling around the world. they are taking note of china's growing economy and heading there to get their degrees. >> reporter: pennsylvania native eric sidener is studying to get an mba at his top choice school. he thought of applying to an ivy league but chose to take classes here in an up and coming program in china. >> lot of energy is happening in
the chinese markets and a lot of the big-name companies are setting up their basis here. >> with the u.s. market depressed, more americans are looking for jobs outside the country. china is a popular place for students like sidener and fellow american classmate denise who want to get closer to a verging market. she turned a class at new york to study at this china-based business school. a degree that she hopes will give her a leg up. if she stays here or returns to the evolving marketplace whack ho back home. >> i started to realize most of my clients are chinese. either coming to expand their business in california or american companies that want to go to china to expand their business there. >> reporter: the number of mba programs here has sky rocketed from six to decades to go to nearly 250 today. some programs almost half full of students from overseas.
school officials admit that the starting salaries of their graduates are lower than those from american schools, but they say their programs offer something that money just can't buy. real world china experience. >> learning with my chinese classmates, speaking man der rin. it's not the kind of experience i would have gotten back in the states. >> reporter: sidener is optimistic about how the networking will help build his career. >> whether i decide to stay here and work in china or go back to the united states and wok for a company in a way that will allow me to live between china and america, i think there's opportunities for both. >> reporter: but for now for these students china is the better bet to get an education and make money. >> and you joined us now from beijing. eunice, your subjects in that story talked about real world chinese experience.
real world china experience. what does that mean in the world world? >> reporter:s there a concept in china known as social networking. it's a really important part of chinese business culture. the students we spoke to said that here they get the opportunity to really meet with lots of different people from various businesses across industries, both on and off campus. they also pointed out that they got a chance to share and swap stories with their chinese classmates who gave them a little more insight into the chinese way of doing business. one example was how to pitch a business idea to your boss, which is a bit more subtle and a bit more complex than it is in the west. one student actually said to me you hear about this stuff all the time, you read about it in the books, but it's really different from daily interaction with people who have experience themselves. >> so somebody is watching this and they can't really travel or live overseas, but they want to sort of tap into this chinese economic growth, what can you recommend to students in that
position? >> reporter: one of the other options that allow the students here were weighing was whether or not they should go for a program back home that has a strong international track. so that's another option that people can really consider. these programs have excellent professors. they also often times as part of their curriculum have some overseas trip. so the point is that they should try to get as much exposure as they can to the market that they are interested in in order to try to make themselves as competitive as possible for that next job. >> eunice, great advice. cnn's beijing correspondent. last week we had an exclusive interview with elizabeth warren. this week she came under attack by republicans. why it happened next p transitions adapt to changing light so you see a whole day comfortably and conveniently while protecting your eyes from the sun. ask your eyecare professional
welcome back to "your $$$$$." christine romans joins me now. if you saw the show last week, you caught my conversation with white house special advisor elizabeth warren about some of the steps she wants to take to protect consumers. this week she found herself under attack by republicans as she testified before the house oversight and government reform panel. listen. >> so it's gone beyond your advice to treasury. you are also providing advice to other governmental agencies. >> congressman -- >> i understand, you can use the word congressman a number of times, ms. warren. i'm simply asking a very simple question. is there a duty to educate yourself? yes or no. >> i believe that an empowered consumer is a consumer who
cannot only protect himself or herself but one who can change the market. >> mr. chairman, i give up. >> elizabeth warren gets grilled like she's a wall street fat cat for wanting to set up the consumer financial protection bureau which will hopefully protect consumers from the great recession in the financial crisis that we have. what is it about elizabeth warren that gets republicans so fired up? >> i think it's probably three things. the first thing is wall street hates her. elizabeth warren really was the person who came up with and spearheaded this idea of the consumer protection agency, and if it really gets up and running, it will cut into the profits of big banks and it will give them less room for maneuver, so they don't like her and politicians who are close to wall street don't like her. >> at the moment there are 44 republicans who are in some fashion either trying to hold up her appointment or take the
teeth out of the agency, christine, and, you know, it's just weird to me that they are setting this up as a position. it's going to back fire. >> she's an outsider in that she's representing consumer interest in a place where a lot of people say there weren't consumer interest represented long enough because she doesn't play the game or hasn't played the game for years, there's not the usual horse trading that happens behind doors, it's just elizabeth warren trying to say what she thinks is happening with this agency. the thing that makes her attractive as an outsider is the thing that may make her ineffective. >> what happens outside the united states? is someone who stands up for consumer protections an outsider? do these things happen better in other places than in america? >> not really. and in terms of the way which they get beaten up, we had an example of that this week where the minister responsible for the coast guard of all things managed to get beaten up before parliamentary economy.
politicians play to the peanut gallery when they get somebody in front of them and they puff up their chests and say they are the voted representatives of the people and how dare you. do you not realize you are infringing and on it goes and on it goes. and if it wasn't so comical, it would actually be serious because these are the very same people who will happily talk the hind legs off the donkey if given a chance. and they won't give a yes-or-no answer when asked about national policy. >> good to know we are all exactly the same around the world, richard. >> can i just jump in quickly? i agree with richard about this theater and i do think politicians are drama queens wherever you go, but on consumer protection, actually when it comes to financial products, american consumers have less
protection from the government than consumers in a lot of other countries. ali, our own native canada has quite aggressive protections on what consumers can do in terms of financial products. some people might say that's actually a restriction. it is. but it does sort of save you from yourself. and that's the debate that's going on right now with elizabeth warren. >> i'm very curious as to how this plays out. taken the sides against consumer protection is going to come back and haunt somebody in an election commercial at some points. the times of stuffing money under a mattress for a long day seem to have been long gone and are so the days of savings. we have been seeing the savings rate tick up. a new study shows that 50% of americans would struggle to come up with $2,000 in a pinch even in a minor emergency like a home repair. christine, this doesn't jibe with what we have been seeing for two years now. the savings rate is being increased in america, which means to me that those who have some money are saving more, and there are a whole lot of people,
half of the population who are saving nothing. >> look, we know transunion credit card data this week also showed that people are paying down their credit card debt, but paying down your debts and deleveraging your personal balance sheet doesn't mean you have got enough money saved. what happened was a housing bubble and a housing bubble that we are still feeling. people haven't built up the cash caution low enough yet. when you are talking about rising health care costs, longer you are going to have to work before you retire. rising education. rising costs to feed your family, build your house, it's still a very serious situation. >> so is it a behavioral problem or is this just a sign of the economic times? >> i think it's more a sign of economic times. as christine says, people had a lot of debt. they are still paying that off, and if you are unemployed or not as employed as you would like, so not working full hours or working at a job at the bottom of the pay scale, it's really hard to save up that $2,000. >> richard, i have got a story specifically for you here
because it's a real treat to have you here working as opposed to on one of those several vacations you take. americans are not savers, but we are workaholics. a survey from expedia.com shows not only do americans get less vacation than everyone, they also don't seem to take the vacation they get. richard, what's going on with the rest of the world? are we all just lazy? >> no, stop that now. reverse the question, ali. what's wrong in the united states? you're archaic. it is prime evil. it is medieval. the way in which people get two weeks vacation and even then feel guilty about taking it. ask any ceo, do you want a workforce that is rested, engaged, and focused. and then ask them how do you expect people to do that if you let them have ten days vacation a year. yes, ali, in this room behind me, everybody gets up to five weeks vacation, including
national holidays, paid vacation -- don't do that. >> my word, as you would say. i think it's time for us to gang up on christine. you're british. chris thea and i are both canadian. christine, explain yourselves and your country. >> as the token american on this panel, i would like to say we love to work in this country, we really do, but there are also some of us saying -- there's some analysis that shows in some cases it's because people don't want to spend the money on a vacation. i guess they could stay home and take the day off, but they found that they don't have the money to spend to go away so they might as well be working. >> the other thing for me that's interesting about americans and leisure is that the rich work as hard or harder than the poor. so it's not just about money. it's people at the very pop are working some of the longest hours. >> back to you, richard. seems like you're just lazy.
>> well, there is something in american you feel like you have to earn your vacation and only after you have been there for goodness knows how many years and even then you are terrified that the boss might notice. the one thing i've noticed having been to france and italy and spain where people denigrate their work effort, but the fact is the productivity is very high. they just don't do work for work sake. so if they don't have to be in the office at 7:00 a.m. so it looks good to the boss and they go home at six because the work is finished and they don't feel obliged to make it seem as if they are just working every hour. how many of us around this table now has answered an e-mail between the hours of 11 :00 and midnight? >> yes, of course. what better time is there. >> you win. we are all taking a vacation offer the show is over. richard quest, stay right where you are, christine romans, we need an american on the panel so stay where you are as well. the company went public.
why big financial institutions got first dibs on the stock and why you were likely kept out of the loop up next. [ female announcer ] experience dual-action power, with listerine® whitening plus restoring rinse. it's the only listerine® that gets teeth two shades whiter and makes tooth enamel two times stronger. get dual-action listerine® whitening rinse. building whiter, stronger teeth. (announcer) everything you need to stay balanced on long trips.
washington which, of course, leads to politics. democrats were quick to spin the news in their favor. a democratic national committee blog praised president obama and said of republicans, quote, good thing mitt romney, tim plenty, newt gingrich and others weren't in charge. they would have simply let detroit go bankrupt, end quote. christine, is it true, did the heroic democrat save chrysler from the evil republicans. >> except some supporters of mitt romney said this is what he had been push forg aing for all a controlled bankruptcy of chrysler. i think it's really interesting too that just a couple of years ago bailouts were a dirty word. and now you have got fighting in, you know, political circles about who gets the credit for the bailouts. >> they just happen to think that this auto one worked out. but you remember at the time it was entirely likely that it
wasn't going to happen. >> i would push back a little bit against this sort of he said, she said interpretation of what happened. this was a controversial and politically difficult thing for the white house to do. it was definitely led by the democrats. it definitely goes against the really strong prevailing republican ideology. and the fact is it actually worked. this intervention by the state saved two big companies. >> i would say the outgoing white house did support the idea and mitt romney has deep roots in michigan also supported it. how did it play for you, richard? >> basically the u.s. government ha hanged it up being the lender of last resort. the banking system could have picked up the slack. if you look at the t.a.r.p. overall, most of the money has now been paid with profits and with interest. but not everybody says t.a.r.p. was a brilliant idear and hip
hip hooray, but, of course, the recession that came as a result of the crisis was so bad that so many other car cities, detroit had been allowed to go to the wall. the unemployment benefit, the health care costs, all the attendant costs that would have gone with that would have dwarfed the seed capital that went to chrysler. >> that is far too n-- shows tht billions in stimulus funds went to contracts that owe the government $757 million in back taxes. about 5% of all contractors who got stimulus money are now delinquent on their taxes. these were designed to create roads, create jobs. do you think taxpayers got a raw deal? >> in these specific instances, absolutely. having said that on balance was
the stimulus a bad idea? absolutely not. if you look at the countries which really cut back sharply in the teeth of the recession, their economies are much weaker than the u.s. economy. >> richard? >> no way. >> you're in britain. you guys -- >> we are cutting bab back now because we have a budget of 10% which can no longer be sustained. >> sure, it can be sustained. >> well, yes, then we would end up like grease or portugal. >> in contrast with those countries, brittain issues debt in its own currency, richard. you know that the parallel is not exact. >> and we also issue long dated debts which of course is not so bad. but let me ask you, why is greek debt over 17% when the greek financing for the next year or two is guaranteed by the ecb and
the eeu, and the fact, of course, is simple. because they still haven't taken the necessary measures to bring the deficit credibly. and you will find the same thing over there. >> to bring the conversation back to where we started, i think i'm getting agreement from everybody here that regardless of the fact that these back taxes are owed, that should not be used as a justification for the fact that this shouldn't have happened. >> and i would go one further and tell you that at the time, remember there were overseers of the stimulus. i'm not condoning it. i'm saying it really is rotten that somebody would take my money and put it in their pocket. at the time the goal was to get as much money working in as many ways as possible as quickly as possible because that money, even if it's in some hooligan's pocket is still at work somewhere in the economy. >> keep your eye on the big picture. in these vast programs, there is going to be a bit of waste. there is going to be a bit of fa
nagling and money going under the carpet. >> social networking linked in debuted its initial public offering last week reminding many of the days of the tech boom. take a look at this. the stock priced, which means that's what they offered it out at, at $45. that's not where it opened. it opened at $83. quickly jumped above $100 a share. but the celebration has prompted many questions. it is institutional investors, not us who get access to the $45 ipo price. company like linked in pays for extensive research to be done to set that price. a company always wants to set it at the right place. for one reason or another investors felt its shares were clearly one way. richard, first, the $45 was too low. two, case of krohnism who they
got an $85 stock for $45. or the price of $45 was right but the for ver for them to get in on this drove shares toish rational levels. which was it? >> a combination of number one, they were incompetent in setting the price and number three, they just got it wrong. there was over 7 million shares offered up. you want a nice pop on an ipo, you want 10%, maybe 20%, they got 100%. it's not as bad as lenox in 1999 which got nearly 700%. >> you are taking us back. >> it makes us think about those tech booms. average investor who get in on that first day. >> richard did not say krohnism and i'm not quite sure because i think there are a lot of insiders who got a chance to get in on that. i never count out a little bit of krohnism in wall street.
i would say it's a blend of all three of those explanations. >> i think it's actually mostly number three. i think that the bankers were genuinely surprised. i think in their heart of hearts they probably think that linkedin isn't worth quite as much. >> maybe it's worth the 10% richard talked about or 20% more. they price too well and people are too eager to get a piece of the action. >> and i think we are maybe in the middle now of a real boom in internet text dogs. we saw this week with the russian search company also having a really successful ipo. i think that they were just surfing a wave and the wave went higher than they thought. the other important point to note is for the actual owners and founders of linked in, you might think, did these guys get, i was going to say screwed, can i say that word? >> say it. >> did these guys get screwed by wall street? and actually, i think the answer is not so much because the truth is they still own most of the company. this has made them one of the sexiest companies on the street.
and actually i don't think they are that unhappy with their bankers. >> trying to figure out how to price these things. >> she calls it a boom. folks, thanks for joining us. the markets are up, the markets are down. it's not necessarily an investing atmosphere if you are feint of heart. i'm going to show you how to defensively invest your money next. ♪ ooh-oo, child, things will get brighter ♪ ♪ ♪ someday, yeah [ male announcer ] wherever you are, whatever it takes, like a good neighbor, state farm is there. ♪
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well, may has been somewhat of a seesaw month, but there are steps you can take to invest cautiously. jim is here with more on this, slow economic recoveries and europe's debt problem and the end of the bond's buying spree, we have had a rough month in may. the dow is down by the end of the month by 4%, 3% to 4%, are you worried about that? >> you have to say there's a lot that can go wrong.
cycl cyclicly, you are growing but there's a lot to worry about and an investor has to look at the possibilities of either the market going up or not going up and position yourself for each eventuality depending on your opinion. >> but that doesn't mean not investing, necessarily. >> no, there's not a case for being overly bearish but there's a case for being more conservative than what's been appropriate the last two years. >> we talk about a trade exchange fund, which you buy as a basket of stocks. you like spy, which is the s&p 500. >> what i'm saying is small stocks have done phenomenally well because they are the ones that got hurt the most when the market went down, they recover the fastest when the economy recovers. >> because they are nimble. >> they are nimble and the stocks are volatile. when they go up it is more than you expect and they go down more than you expect. it doesn't take much money to move them either way. with a phenomenal move in
stocks, look at the month of may, small stocks are down more than big stocks. i would say to the extent that you want to position yourself more cautiously, sell small stocks and go into big stocks with a global footprint, less leverage, pay dividends and that would allow you to stay invested more coffin conservatively. >> the one-year change on the market has dipped a little bit after a 23% run. let's talk about gold, people worry about the u.s. dollar as well. you picked anticer symbol of iau, tell me about this. >> basically you are saying if anything can go wrong the most likely thing to go wrong is debt, most likely in europe, people, if that happens, people won't want to own debt or currencies. and there's a large percentage that goes straight to gold, particularly in emerging markets, that's what people buy.
a cheap way to buy it is etf constructed to contract the price of gold, it has a low cost, it is liquid, get in and get out, for the average investor, if you want to own gold and hedge yourself against uncertainty, this is the way to do it. >> you can do this one that attracts gold or do other that is are a basket of gold companies. >> right, absolutely. i'm not opposed to either, but this is the most leverage to the price of the metal itself. >> this is the way to do that. as i know you always recommend, the average viewer should be diversified. >> absolutely. you should have an asset allocation with viewing it regularly so you are not extreme in your investing. the reality is a lot of blocking and tackling down the middle, that's how you make money. >> jim, great to see you. >> thank you. are massive spending cuts
the key to saving the economy? the answer can be found in europe or my xyz coming up next. ♪ you love money ♪ well, you know i love it too ♪ ♪ you love money ♪ well, you know i love it too ♪ ♪ i work so hard at my job ♪ and then i bring it home to you ♪ ♪ i love money in my pocket itchy, irritated skin... not only does cortaid 12-hour advanced cream relieve itch fast, but a clinical study shows its unique itch shield technology lasts longer than the leading cream. for 12 hour protection. for long lasting protection try cortaid.
time now for the y xyz of it. president obama was in ireland with countries fighting resilient spirit, but you didn't hear the sheer pain the irish people have been experiencing lately. the company has been cutting spending for three years now and had to impose measures as a condition of accepting an international bailout last year. while we consider osser thety measures in the united states as a way to cut spending without increasing taxes it would be instructive to see what's become of the irish belt tightening. as is often the case in severe osser thety problems, the unemployment rate has soared approaching 15%. same across europe, greece, portugal and spain. all the countries adopted
measures of austerity to get their economic growth under control. the pain has been acute, bad enough to spark violent protests in some of the nations. come conservatives in the u.s. including members of the tea party are calling for austerity measures here in the united states. those calls are going to get louder as the debt ceiling fight comes to a head in the coming weeks. i trust they will set ideology aside to look at the lessons of europe. it is crucial to cut the debt in the medium and long-term but doing so before real economic growth has a chance to take route could jeopardize a real recovery cutting too severely and too quickly could lead to higher unemployment. the clock is ticking on the debt and america's triple-a rating is on the line. let's hope the representatives can put the politics aside to get us back on sound fiscal footing without derailing the economic recovery. while we could all use the luck of the irish, we don't